SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 3, 1997
MELAMINE CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-16032 64-0475913
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
Highway 18 West, Donaldsonville, Louisiana 70346
(Address of principal executive offices) (Zip Code)
(504) 473-3121
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 3, 1997, pursuant to the terms of a Technology Transfer and
Technical Cooperation Agreement dated February 25, 1997 (the "Agreement")
by and between Melamine Chemicals, Inc. (the "Company") and DSM Melamine
B.V. ("DSM"), the Company assigned to DSM its patented and unpatented high
pressure and high temperature noncatalytic melamine process and production
technology (the "Technology"), and granted to DSM a non-exclusive license
to use its related application patents worldwide. In exchange therefor,
the Company received $25 million, $15 million of which was paid at closing
and $10 million of which is payable in two equal installments under
promissory notes maturing January 1, 2000 and January 1, 2005. These notes
will bear interest at a per annum rate of 5.94% and 6.32%, respectively,
payable annually on January 1 of each year during which the notes remain
outstanding. In addition, the Company has retained the royalty-free right
to use the Technology to (i) construct in the Western Hemisphere up to two
additional melamine plants with an aggregate maximum production capacity of
80,000 metric tons (only one of which may be built outside of the United
States or Canada) and (ii) construct any additional melamine plants in the
United States or Canada that replace the 50,000 metric tons of aggregate
annual production capacity of the Company's two existing melamine plants in
Donaldsonville, Louisiana. As additional consideration under the
Agreement, DSM will assist the Company in modifying its low pressure
melamine plant to implement improvements to be recommended by DSM following
its study of the Company's plant. The Company anticipates that DSM will
complete its study and issue its recommendations in late 1997 or early
1998.
Subject to certain exceptions, prior to June 2015 (i) DSM will not be
permitted to use the Technology to construct a melamine plant in the United
States or Canada, other than plants built by DSM or its affiliates to
replace the 80,000 metric ton production capacity of DSM's joint venture
melamine plant located in Fortier, Louisiana, and (ii) the Company will not
be permitted to use the Technology to construct a melamine plant outside of
the Western Hemisphere. The Company and DSM will remain free to sell
melamine worldwide without restriction under the Agreement.
Under the Agreement each party will cooperate for ten years in the
development of improvements to the Technology. All such improvements
developed by the Company, DSM or both during this ten-year period will be
owned by DSM, subject to the Company's royalty-free right to use such
improvements in the Western Hemisphere on the same terms as the Technology.
Subject to certain limitations, DSM will be permitted for ten years to use
the Company's existing high pressure and high temperature plant to test
ideas that DSM reasonably believes may be developed into commercially
useful improvements of the Technology. DSM will have access to such plant
for up to eight weeks annually during the first four years of the
Agreement, and for up to six weeks annually during the next six years.
Subject to certain limitations and restrictions, the Company has
agreed to indemnify DSM under various circumstances, including in
connection with any proceedings alleging that DSM's ownership or use of the
Technology infringes any other person's intellectual property rights.
<PAGE>
DSM is a subsidiary of DSM N.V., an international chemical and
materials company headquartered in Heerlen, The Netherlands. Either
directly or through joint ventures, DSM operates melamine plants in Europe,
the United States and Indonesia.
The foregoing description of the Agreement is qualified in its
entirety by reference to the Agreement, a copy of which is filed herewith
as Exhibit 2.1.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not Applicable.
(b) Pro Forma financial information.
Not Applicable.
(c) Exhibits.
2.1 - Technology Transfer and Technical Cooperation Agreement,
dated as of February 25, 1997, by and between Melamine Chemicals,
Inc. and DSM Melamine B.V. (Portions of this agreement are
confidential and have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment.)
Pursuant to the regulations of the Securities and Exchange
Commission, all schedules and exhibits to the foregoing agreement
(other than Exhibits B, C, E) have been intentionally omitted
from this Report. The table of contents to the foregoing
agreement contains a complete listing of all schedules and
exhibits. Registrant agrees to furnish supplementally a copy of
any omitted schedule or exhibit to the Securities and Exchange
Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MELAMINE CHEMICALS, INC.
By: /s/ Wayne D. DeLeo
--------------------------------
Wayne D. DeLeo
Vice President and
Chief Financial Officer
Dated: April 10, 1997
EXHIBIT 2.1
<PAGE>
TECHNOLOGY TRANSFER AND TECHNICAL COOPERATION AGREEMENT*
by and between
MELAMINE CHEMICALS, INC.
and
DSM MELAMINE B.V.
February 25, 1997
* Portions of this agreeement are confidential and have been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment in accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended. Where information has been
deleted a "[*]" has been inserted to indicate that information has been
omitted.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS...........................................1
Section 1.1 Definitions......................................1
Section 1.2 Other Definitional Provisions....................4
ARTICLE 2 - TRANSFER OF MCI TECHNOLOGY TO DSM.....................4
Section 2.1 Technology Transfer..............................4
Section 2.2 Technology Fees..................................4
Section 2.3 Restrictions on Use of Technology................4
Section 2.4 Option of MCI to Build Additional Plants.........5
ARTICLE 3 - TECHNICAL ASSISTANCE OF DSM RELATING TO M-I PLANT.....5
Section 3.1 Technology Assistance............................5
Section 3.2 Study; Technical Assistance......................5
Section 3.3 License..........................................7
Section 3.4 Other Technical Assistance.......................7
ARTICLE 4 - THE CLOSING...........................................7
Section 4.1 Closing..........................................7
Section 4.2 Deliveries at Closing............................7
ARTICLE 5 - IMPROVEMENTS OF TECHNOLOGY............................8
Section 5.1 Development of Improvements......................8
Section 5.2 Acquisitions of Improvements.....................9
Section 5.3 Reports..........................................9
ARTICLE 6 - TRANSFER, RECORDATION ANDMAINTENANCE OF PATENTS......10
Section 6.1 Recordation of Patent Assignment................10
Section 6.2 Maintenance of Process Patents..................10
ARTICLE 7 - TRANSFER OF UNPATENTED TECHNOLOGIES..................10
Section 7.1 Transfer of Know-How............................10
Section 7.2 Transfer of Unpatented Improvements.............11
Section 7.3 Access to the Other Party's Plants..............11
Section 7.4 Other Technical Assistance......................12
<PAGE>
ARTICLE 8 - SECRECY AND CONFIDENTIALITY..........................12
Section 8.1 Confidential Information........................12
Section 8.2 Permitted Recipients............................13
Section 8.3 Prior Notice....................................14
Section 8.4 Control Procedures..............................14
ARTICLE 9 - INFRINGEMENT ACTIONS BY THIRD PARTIES................14
Section 9.1 Infringement Actions by Third Parties
involving the MCI Technology....................14
Section 9.2 Infringement Actions by Third Parties
involving DSM's Technology......................14
ARTICLE 10 - REPRESENTATIONS AND WARRANTIES; LIMITATION
OF LIABILITIES; INDEMNIFICATION.....................15
Section 10.1 Representations and Warranties.................15
Section 10.2 Limitation of Liabilities......................17
Section 10.3 Indemnification................................17
ARTICLE 11 - DUE DILIGENCE PERIOD................................20
Section 11.1 Due Diligence..................................20
Section 11.2 Termination Procedures.........................20
Section 11.3 Remedies.......................................21
Section 11.4 Extension of Due Diligence Period..............21
ARTICLE 12 - CONDITIONS TO CLOSING...............................21
Section 12.1 Lapse of Due Diligence Period..................21
Section 12.2 Restraining Action.............................21
Section 12.3 Statutory Requirements and Regulatory
Approval.......................................21
ARTICLE 13 - TERMINATION AND AMENDMENT...........................22
Section 13.1 Term...........................................22
Section 13.2 Modification...................................23
ARTICLE 14 - MISCELLANEOUS.......................................23
Section 14.1 Force Majeure..................................23
Section 14.2 Waiver.........................................23
Section 14.3 Beneficiaries; Assignment of Rights............23
<PAGE>
Section 14.4 Language.......................................24
Section 14.5 Further Assurances.............................24
Section 14.6 Arbitration....................................24
Section 14.7 Injunctive Remedies............................25
Section 14.8 CHOICE OF LAW..................................25
Section 14.9 Notices........................................26
Section 14.10 Invalid Provisions............................26
Section 14.11 Entire Agreement..............................27
Section 14.12 Press Releases................................27
Section 14.13 Agency........................................27
EXHIBIT A - Map of the Americas.................................A-1
EXHIBIT B - Application Patents.................................B-1
EXHIBIT C - Patent Assignment...................................C-1
EXHIBIT D - Preliminary Information.............................D-1
EXHIBIT E - Form of Promissory Notes............................E-1
EXHIBIT F - Written Know-How....................................F-1
EXHIBIT G - Patent Applications.................................G-1
Schedule 10.1 - Disclosure Schedule.............................S-1
<PAGE>
TECHNOLOGY TRANSFER AND TECHNICAL COOPERATION AGREEMENT
This TECHNOLOGY TRANSFER AND TECHNICAL COOPERATION AGREEMENT, entered
into this 25th day of February, 1997 (the "Agreement"), is by and between
Melamine Chemicals, Inc., a corporation organized under the laws of the
State of Delaware, United States of America, with its principal offices
located at Donaldsonville, Louisiana, United States of America ("MCI"), and
DSM Melamine B.V., a company with limited liability organized under the
laws of The Netherlands, with its principal offices located at Heerlen, The
Netherlands ("DSM").
W I T N E S S E T H:
WHEREAS, subject to the terms and conditions hereof, MCI desires to
transfer the MCI Technology (as defined below) to DSM in exchange for,
among other things, technology fees, retained rights to use such technology
in the Americas (as defined below) and rights to receive and use certain of
DSM's technology, all on the terms and conditions hereinafter provided; and
WHEREAS, DSM desires to acquire the MCI Technology on such terms and
conditions;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 Definitions. In addition to other terms defined in this
Agreement, the following capitalized terms, when used in this Agreement,
shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person. For the purposes of this definition, "control," as used
with respect to any Person, shall mean the possession, directly or
indirectly, of the power to cast 50% or more of the voting power of such
Person; provided, however, that if any Person may cast at least 40% of the
voting power of another Person and is prevented from obtaining 50% or more
of the voting power by restrictions on foreign ownership under the laws of
the jurisdiction under which such other Person is organized, then the
Person possessing such voting power shall nonetheless be deemed to control
such other Person for purposes of this definition.
"Americas" means the areas included within North America and South
America, including Mexico, Central America, and all islands located in the
Caribbean Sea or Gulf of Mexico, all as marked on the map attached as
Exhibit A.
"Application Patents" means the patents and patent applications to be
licensed by MCI to DSM under Section 2.1(c), each of which is listed on
Exhibit B hereto.
"Closing" and "Closing Date" shall have the respective meanings
specified in Section 4.1.
"Closing Date Transactions" means those transactions referred to in
Section 4.2.
<PAGE>
"Confidential Information" shall have the meaning specified in Section
8.1(b).
"Due Diligence Minutes" and "Due Diligence Period" shall have the
respective meanings specified in Sections 11.1(b) and 11.1(a).
"Improvements" means any changes in, improvements to, or discoveries
regarding the MCI Technology, whether or not patentable, developed by MCI,
DSM or both prior to the tenth anniversary of the Closing Date (including
without limitation any such change, improvement or discovery that enhances
its value, increases its efficiency or improves the quality of melamine
produced at Plants that use the MCI Technology, or that can reasonably be
expected to enhance such value, increase such efficiency or improve such
quality); provided, however, that such term shall not be deemed to include
any changes in, improvements to, or discoveries regarding application
technologies, whether or not patentable.
"Initial Plant" means the first Plant built by DSM using the MCI
Technology in whole or in part.
"Know-How" means all of MCI's know-how, show-how, trade secrets,
technical data and other proprietary or nonproprietary information in any
form (other than the Application Patents or Process Patents), whether or
not reduced to a tangible medium, that directly or indirectly relates to
(i) high pressure and high temperature noncatalytic melamine process and
production technology (including all such technology and equipment that is
utilized by MCI at its M-II Plant, and all such proprietary or
nonproprietary information included in any operating manuals relating to
such plant), or (ii) application technology relating to melamine
manufactured under such high pressure and high temperature technology, and
shall be deemed to include without limitation the Preliminary Information.
"Low-Pressure Technology" means the low pressure catalytic melamine
process and production technology used on the date hereof by DSM, MCI and
several other Persons.
"M-I Plant" means the melamine production plant (including the related
carbamate recovery unit) of MCI located in Donaldsonville, Louisiana that
utilizes the Low-Pressure Technology.
"M-II Plant" means the melamine production plant of MCI located in
Donaldsonville, Louisiana that utilizes the M-II Technology.
"M-II Technology" means the Process Patents listed on Annex I to the
Patent Assignment and the related Know-How on the Closing Date, referred to
collectively.
"M-IV Technology" means the Process Patents listed on Annex II to the
Patent Assignment and the related Know-How on the Closing Date, referred to
collectively.
<PAGE>
"MCI Technology" means the M-II Technology and the M-IV Technology,
referred to collectively.
"MCI Territory" means the United States of America and Canada.
"Option Plants" shall have the meaning specified in Section 2.4.
"Patent Assignment" means the Patent Assignment to be executed by MCI
in the form of Exhibit C attached hereto in accordance with the terms of
Section 2.1(b).
"Permitted Recipient" shall have the meaning specified in
Section 8.2(a).
"Person" means any natural person, corporation, partnership, limited
liability company, joint stock company, joint venture, association, trust,
or other entity or organization, whether or not a legal entity, and any
government or agency or political subdivision thereof.
"Plants" means any melamine production plants owned by MCI or DSM,
either on the date hereof or thereafter; provided, however, that such term
shall not be deemed to include any melamine production plant built as a
joint venture between DSM and MCI under Section 2.3(c) or otherwise.
"Preliminary Information" means the preliminary information relating
to the MCI Technology that MCI furnished in writing to DSM prior to the
date hereof, all of which is indexed and attached as Exhibit D (including,
in certain instances, written minutes that reflect information previously
furnished orally to DSM).
"Process Patents" mean the patents and patent applications to be
assigned by MCI to DSM under the Patent Assignment, each of which is listed
on Annexes I and II to the Patent Assignment.
"Promissory Notes" means the promissory notes of DSM to be issued to
MCI on the Closing Date in the form of Exhibit E-1 and E-2.
"Representatives" means, when used in reference to either party
hereunder, the directors, managing directors, supervisory directors,
officers and employees (including temporary employees) of such party.
"Technology Rights" means the rights of MCI to use the MCI Technology
and the Improvements on the terms and subject to the limitations specified
under Sections 2.1 and 5.1(a).
"Travel Costs" means all out-of-pocket costs reasonably incurred by
one party in connection with visiting the facilities of the other party,
including travel (business class air travel), lodging, food, ground
transportation and other related incidental expenses.
"US $" means United States dollars.
<PAGE>
Section 1.2 Other Definitional Provisions. References to "Articles"
and "Sections" shall be to Articles and Sections of this Agreement unless
otherwise specifically provided.
ARTICLE 2 - TRANSFER OF MCI TECHNOLOGY TO DSM
Section 2.1 Technology Transfer. (a) Subject to the terms and
conditions herein contained, MCI agrees to transfer to DSM all right, title
and interest to the MCI Technology; provided, however, that during the term
of this Agreement MCI shall retain the royalty-free right to use the MCI
Technology (i) to continue to operate the M-II Plant, (ii) to design,
construct and operate in the Americas up to two additional Plants (the "New
Plants") employing a total of two reactors that have an aggregate maximum
production capacity of 80,000 metric tons; provided, however, that MCI may
install any additional reactors within a testing facility that produces
commercially insignificant quantities of melamine; and further provided
that MCI may build only one New Plant outside of the MCI Territory (not
including any joint venture plant that may be built by the parties under
Section 2.3(c)), (iii) to design, construct and operate any additional
Plants ("Replacement Plants") in the MCI Territory that replace the 50,000
metric tons of aggregate annual production capacity of the M-I Plant and
the M-II Plant and (iv) to market and sell worldwide all melamine produced
at the M-II Plant, the New Plants or the Replacement Plants.
(b) MCI shall (i) consummate the transfer of the Process Patents
by executing and delivering on the Closing Date the Patent Assignment in
the form of Exhibit C and by performing its covenants under Section 6.1,
and (ii) consummate the transfer of the Know-How by performing its
covenants under Section 7.1.
(c) Effective upon the Closing Date, MCI hereby irrevocably
grants to DSM, during the term of this Agreement, a royalty-free non-
exclusive license to use the Application Patents worldwide. DSM shall be
free to grant sublicenses of these license rights.
Section 2.2 Technology Fees. In exchange for the rights and licenses
granted to DSM under this Agreement, DSM shall pay MCI US $25 million, US
$15 million of which shall be paid through a nonrefundable transfer of
funds on the Closing Date in accordance with Section 4.2, and US $10
million of which shall be paid through the issuance by DSM of the
Promissory Notes on the Closing Date.
Section 2.3 Restrictions on Use of Technology. (a) DSM shall not use
any Process Patent prior to its expiration date and shall not use during
the term of this Agreement any Know-How or Improvements that constitute
Confidential Information under Article 8 to build a Plant located in the
MCI Territory, and shall not authorize or permit any of its Affiliates,
licensees, successors or permitted assigns to use any such technology in
such manner; provided, however, that DSM or, at DSM's option, an Affiliate
of DSM shall have the right to use such technology to design, construct and
operate one or more Plants in the MCI Territory that replace the 80,000
metric ton production capacity of the plant of DSM's Affiliate located in
Fortier, Louisiana.
<PAGE>
(b) MCI shall not use any Process Patent prior to its expiration
date and shall not use during the term of this Agreement any Know-How or
Improvements that constitute Confidential Information under Article 8 to
build a Plant located outside of the MCI Territory (other than as permitted
in Section 2.1(a)(ii) or 2.3(c)), and shall not authorize or permit any of
its Affiliates, licensees, successors or permitted assigns to use any such
technology in such manner.
(c) DSM and MCI shall be permitted to use the MCI Technology and
Improvements to build a melamine production plant located in [*], but only
if such plant is owned and operated by a joint venture company organized by
DSM and MCI on terms and conditions mutually agreeable to both parties. At
any time during the term of this Agreement, either party may consult with
the other party regarding the possibility of a joint venture in [*], but
neither party shall have any obligation to pursue any such venture.
Section 2.4 Option of MCI to Build Additional Plants. After MCI or
its Affiliates have constructed two New Plants in accordance with Section
2.1(a), MCI shall have the right to use the MCI Technology to design,
construct and operate in the MCI Territory additional Plants ("Option
Plants") upon payment to DSM of [*] per Option Plant. MCI shall be free to
market and sell worldwide all melamine produced at any Option Plant.
ARTICLE 3 - TECHNICAL ASSISTANCE OF DSM RELATING TO M-I PLANT
Section 3.1 Technology Assistance. As additional consideration for
the rights and licenses granted to DSM under this Agreement, DSM shall
conduct a study with respect to improving MCI's M-I Plant (the "Study"),
shall provide technical assistance in connection therewith, and shall grant
the license specified below, all on the terms and conditions hereinafter
provided.
Section 3.2 Study; Technical Assistance. (a) After the Closing Date,
DSM Representatives will visit the M-I Plant to enable DSM to make
preliminary assessments regarding possible improvements to the M-I Plant.
This initial visit will be conducted on dates mutually agreeable to the
parties, provided that it is completed within 120 days of the Closing Date.
Within 60 days of the completion of this visit, (i) DSM shall consult with
MCI regarding DSM's preliminary assessments and recommendations regarding
improving the M-I Plant, (ii) MCI shall prioritize its objectives for
improving the M-I Plant, including without limitation prioritizing the
benefits associated with increasing the rate at which the M-I Plant
produces melamine, decreasing the variable cost at which such plant
produces melamine, improving the quality of such plant's melamine, reducing
such plant's waste products and emissions into the environment, and
improving the safety of such plant's operations, and (iii) DSM and MCI
shall agree to the scope of the Study and the activities to be undertaken
by DSM in connection therewith.
(b) Upon completion of the actions specified in paragraph (a),
DSM shall have up to 180 days to commence, conduct and complete the Study,
and shall, within 30 days after completing the Study, report the results
thereof in writing to MCI, together with DSM's written recommendations
regarding the improvements DSM deems possible and beneficial, the expected
benefits of each such improvement, and DSM's estimates of the cost of
____________________
* Omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
<PAGE>
implementing each such improvement (collectively, the "Study Report").
Unless otherwise agreed to the contrary by MCI in writing, one of DSM's
recommendations shall be to replace the reactor in the M-I Plant with a new
reactor that incorporates DSM's patented and unpatented melamine reactor
technology. Prior to and during the Study, MCI shall provide DSM with any
and all information and data pertaining to the M-I Plant as shall be
reasonably requested by DSM to carry out the Study.
(c) Upon MCI's receipt of the Study Report, DSM shall, at MCI's
request, discuss the Study Report with MCI. Within 120 days of MCI's
receipt of such report, MCI shall advise DSM in writing (the "Response
Notice") as to which recommendations, if any, MCI desires to pursue and
implement.
(d) Upon receipt of MCI's Response Notice, DSM shall consult
with MCI to determine the most effective means of implementing such
recommendations and DSM shall use its commercially reasonable best efforts
to assist MCI in the implementation of such recommendations to the extent
DSM has the requisite knowledge, expertise and experience, and provided
that such assistance does not unreasonably interfere with DSM's normal
operations and business. Such assistance may include the preparation of
any necessary basic engineering data, the delivery of written documents,
visits to the M-I Plant by DSM Representatives, visits to DSM's Plants by
MCI Representatives, training of MCI Representatives by DSM Representatives
or taking any other mutually agreeable actions. DSM shall not be required
to provide any technical assistance under this paragraph for more than 270
days after the date it receives MCI's Response Notice; provided, however,
that such 270-day period shall be extended for up to 24 months with respect
to any improvements that cannot be timely implemented due to delays
associated with constructing and transporting reactors or other process
equipment or due to other events outside the reasonable control of the
parties.
(e) DSM's Representatives and advisors shall spend, free of
charge to MCI, up to 300 man-days in connection with all of the activities
described in this Article. MCI shall reimburse DSM for all reasonable out-
of-pocket expenses associated with activities by each DSM Representative or
advisor hereunder (including Travel Costs), and shall pay DSM a per diem
amount for each day worked by any DSM Representative or advisor in excess
of 300 man-days. All per diem rates of DSM's Representatives charged
hereunder shall equal 1/250th of such Representative's annual cash
compensation.
Section 3.3 License. (a) Effective upon the date that MCI delivers
its Response Notice, DSM hereby grants to MCI, during the term of this
Agreement, a royalty-free license to use at the M-I Plant any patents,
patent applications, know-how and other technology owned by DSM that are
necessary for MCI to implement the improvements to the M-I Plant to be made
under this Article and to market and sell worldwide all melamine produced
at such plant; provided, however, that DSM shall not be obligated to
license any such technology of which it cannot freely dispose due to
contractual restrictions that will be disclosed to MCI in writing no later
than the effective time of the license. Within 10 days of the date upon
which MCI delivers its Response Notice, DSM shall furnish a certificate to
<PAGE>
MCI certifying that it owns all patents licensed under this Section and has
the right to use and license any know-how or other technology licensed
hereunder (in each case free and clear of any title encumbrance), subject
to any exceptions previously disclosed to MCI under the prior sentence.
This license conveys no right to grant sublicenses, and the technology
licensed hereunder may not be transferred or assigned by MCI in any manner,
except in connection with a sale or transfer of control of the M-I Plant in
a transaction of the type described in Section 14.3(b)(i) or unless DSM
approves the transfer in writing.
(b) Each provision herein that permits MCI to use the technology
licensed under this Section at the M-I Plant shall also permit MCI to use
such technology at any subsequent Plants utilizing the Low Pressure
Technology that replace the M-I Plant and which have an aggregate maximum
production capacity not exceeding 37,000 metric tons.
Section 3.4 Other Technical Assistance. If, prior to the date upon
which DSM's obligations to provide technical assistance under this Article
3 lapse, MCI requests technical services regarding DSM's Low Pressure
Technology, or its implementation or use, that are not contemplated by the
terms of this Agreement, DSM shall engage in good faith discussions with
MCI to determine if DSM can provide such services on mutually agreeable
terms and conditions.
ARTICLE 4 - THE CLOSING
Section 4.1 Closing. A closing (the "Closing") of the Closing Date
Transactions shall take place at Donaldsonville, Louisiana commencing at
9:00 a.m. on a date (the "Closing Date") to be mutually agreed upon between
the parties, which shall be no later than the fifth business day following
the date upon which the conditions to the obligations of the parties set
forth in Section 12.1 are fulfilled or duly waived, or, if no date has been
agreed to, on any date specified by one party to the other upon five days'
written notice following satisfaction of the conditions to the obligations
of the parties set forth in Section 12.1; provided, however, that in no
event will any party be obligated to consummate the Closing Date
Transactions unless all other closing conditions set forth in Article 12
that are applicable to such party shall have been fulfilled or duly waived
on or prior to the Closing Date.
Section 4.2 Deliveries at Closing. If all conditions set forth in
Article 12 are satisfied or waived by each party entitled to grant such
waiver, at the Closing (i) MCI shall duly execute and deliver the Patent
Assignment, (ii) DSM shall pay to MCI US $15 million by bank wire transfer
of immediately available funds to MCI's account at Hibernia National Bank,
New Orleans, Louisiana (ABA No. 065000090, Account No. 047977934), and
shall duly execute and deliver to MCI the Promissory Notes, and (iii) MCI
and DSM shall each provide, upon the reasonable request of the other party,
appropriate evidence of the satisfaction of the conditions set forth in
Article 12.
<PAGE>
ARTICLE 5 - IMPROVEMENTS OF TECHNOLOGY
Section 5.1 Development of Improvements. (a) All Improvements
developed by DSM, MCI or both prior to the tenth anniversary of the Closing
Date shall be owned by DSM; provided, however, that during the term of this
Agreement MCI shall be permitted to use each such Improvement royalty-free
for each of the purposes specified in items (i) through (iv) of Section
2.1(a), but shall not be permitted to use any such Improvements in any
Option Plant.
(b) Between the Closing Date and the tenth anniversary of the
Closing Date, each party shall designate at least one qualified full-time
individual whose primary responsibility will be to develop Improvements.
If either party develops any ideas that it believes may be developed into a
commercially useful Improvement, it may pursue the idea by itself or ask
the other party if it is interested in pursuing such idea unilaterally or
jointly. If such other party is interested in pursuing such idea jointly,
the parties shall consult regarding the financial and non-financial
contributions that each party will provide to the joint development. The
parties shall periodically consult to determine the status of each party's
efforts to develop Improvements.
(c) Between the Closing Date and the tenth anniversary of the
Closing Date, DSM may use the M-II Plant on the terms and conditions
specified herein to test ideas that DSM reasonably believes may be
developed into commercially useful Improvements. For each of the first
four one-year periods ending on the anniversary date of the Closing DSM
shall be entitled to use the M-II Plant on the terms hereof for up to eight
weeks for testing purposes, and for each of the next six succeeding one-
year periods ending on such date DSM shall be entitled to use the M-II
Plant on the terms hereof for up to six weeks for testing purposes;
provided, however, that in connection with such testing MCI shall not be
required to either (i) reduce MCI's production of commercially saleable
melamine by more than 50% during such six-week or eight-week period from
the amount that MCI reasonably determines would have otherwise been
produced during such period (which amount MCI shall substantiate, if
requested, by reference to prior production records or then-current
operating budgets) or (ii) produce during any such one-year period more
than 500,000 pounds of melamine that cannot be reprocessed or sold at
prices at least 70% of then-prevailing market prices ("non-saleable
melamine") unless (A) DSM reimburses MCI for all raw material costs
associated with producing all non-saleable melamine in excess of 500,000
pounds and (B) DSM reimburses MCI for all of MCI's costs of disposing of
such excess non-saleable melamine or DSM disposes of, sells, or otherwise
takes custody of and responsibility for all such excess non-saleable
melamine at no cost to MCI. If DSM desires to use the M-II Plant for
testing purposes under this Section, DSM shall provide no less than 15
days' written notice of the dates upon which it proposes to conduct such
tests, as well as a brief description of the proposed tests and the
personnel that would conduct such tests.
(d) Upon MCI's receipt of any notice in accordance with
paragraph (c), MCI and DSM shall consult regarding the timing, scope, cost
and staffing of the proposed testing, as well as the likely impact of the
testing on MCI's business, on the environment and on the health and safety
of the parties' employees. Following such consultations, MCI shall conduct
the testing at such times and on such terms and conditions as are mutually
<PAGE>
agreeable to the parties; provided, however, that MCI shall not
unreasonably withhold its consent to any testing schedule or to any terms
and conditions proposed in good faith by DSM following such consultations.
In no event, however, shall MCI be required to consent to (i) conducting
testing on any dates on which the M-II Plant will be closed for a
turnaround or other substantial maintenance that was scheduled prior to the
receipt of DSM's notice, (ii) any involuntary purchase of testing equipment
or the incurrence of any other out-of-pocket costs in connection with such
testing in excess of US $50,000 in the aggregate during any one-year
testing period, or (iii) conducting testing for more than four weeks in any
of the four quarters comprising any one-year testing period. Unless MCI
otherwise agrees in writing or unless testing during any one-year testing
period is delayed under item (i) above, any weeks of testing not used
during any one-year period shall not carry over to future testing periods.
During any testing period, MCI reserves the right to maintain control of
the operations of the M-II Plant; provided, however, that DSM may at its
cost send Representatives to the M-II Plant during such period to assist
MCI in conducting the tests and to monitor the results.
(e) Neither MCI nor DSM may assign any of their rights or
obligations under this Section except in the manner contemplated by Section
14.3.
Section 5.2 Acquisitions of Improvements. (a) At all times prior to
the tenth anniversary of the Closing Date, each party shall take any action
that may be necessary under applicable law to ensure that each of its
Representatives shall lawfully assign to it each Improvement that they may
develop, and each party shall use its commercially reasonable best efforts
to obtain an agreement from any other Permitted Recipient that such
Permitted Recipient shall assign to it freely transferable rights to use
each Improvement that such Permitted Recipient may develop. All such
Improvements assigned to either party shall be governed by Section 5.1(a).
(b) If prior to the tenth anniversary of the Closing Date,
either or both parties acquire a freely transferable right to use any
Improvement from any educational or research institution, equipment
supplier, customer, consultant, competitor or other third party, the
parties, to the fullest extent permitted, shall own and may use such
Improvement in accordance with Section 5.1(a). To the extent necessary,
each party shall use its commercially reasonable best efforts to enable the
other party to own or use such Improvement in the manner contemplated by
Section 5.1(a). If such acquiring party may only obtain such rights for
the other party in exchange for additional consideration, the acquiring
party shall consult with the other party to determine how to proceed.
Section 5.3 Reports. If prior to the tenth anniversary of the Closing
Date any party develops or acquires any Improvements, it shall promptly
inform the other party and make arrangements to disclose such Improvement
to the other party in the manner specified in Article 7, in each case to
the full extent that it is free to do so.
<PAGE>
ARTICLE 6 - TRANSFER, RECORDATION AND
MAINTENANCE OF PATENTS
Section 6.1 Recordation of Patent Assignment. Promptly after the
Closing Date MCI shall, at its cost, take all steps that are necessary or
appropriate to perfect the conveyance of title of the Process Patents from
MCI to DSM in each jurisdiction listed on the Annexes to the Patent
Assignment. Without limiting the generality of the foregoing, MCI shall
(i) file the Patent Assignment in each of the jurisdictions described
above, (ii) execute, deliver and file any other necessary documentation,
and (iii) pay all filing fees, attorney fees and other costs related to
perfecting the conveyance of title of the Process Patents hereunder. If it
is unclear under the laws of any jurisdiction whether MCI can unilaterally
perfect the conveyance of title hereunder, then the parties shall consult
to determine whether DSM's assistance is necessary to perfect the title
conveyance hereunder. MCI shall also cooperate with DSM to the extent
necessary in recording DSM's ownership of the Process Patents in any
jurisdiction other than those listed on the Annexes to the Patent
Assignment.
Section 6.2 Maintenance of Process Patents. (a) Following the date
upon which the conveyance of title of the Process Patents is perfected
under Section 6.1 under the laws of any jurisdiction, DSM shall, at its
cost, take all steps that are necessary or appropriate to preserve and
maintain the Process Patents in such jurisdiction (including without
limitation paying or filing all necessary patent renewal fees or
applications); provided, however, if DSM elects in its sole discretion to
abandon the Process Patents in any particular jurisdiction, DSM shall first
offer to assign to MCI the Process Patents in such jurisdiction, subject to
DSM retaining a non-exclusive, royalty-free license to use the Process
Patents in such jurisdiction. If MCI rejects such offer, DSM shall be free
to abandon the Process Patents in such jurisdiction.
(b) DSM shall, at its cost, use its commercially reasonable best
efforts to secure patents in the MCI Territory for any Improvements as to
which DSM files a patent application outside the MCI Territory, and to
thereafter preserve and maintain any such patents granted in the MCI
Territory (including without limitation paying or filing all necessary
patent renewal fees or applications). MCI shall cooperate with DSM to the
extent necessary under the laws of any jurisdiction to secure patents for
any Improvements.
ARTICLE 7 - TRANSFER OF UNPATENTED TECHNOLOGIES
Section 7.1 Transfer of Know-How. (a) No later than 30 days after
the Closing Date, MCI shall deliver to DSM all of the written materials
described on Exhibit F. MCI shall be permitted to retain copies of all
such materials.
(b) MCI shall furnish to DSM all Know-How not otherwise
delivered under paragraph (a), and shall otherwise provide technical
assistance to DSM in constructing its Initial Plant, on the terms set forth
in this paragraph. Upon DSM's request and at such times as may be mutually
agreeable to the parties, MCI shall:
<PAGE>
(i) furnish to DSM all Know-How that will assist DSM in
designing, engineering and constructing the Initial Plant and its
process equipment, and procuring all necessary materials in connection
therewith, including permitting personnel of DSM to visit the M-II
Plant at DSM's cost;
(ii) furnish to DSM all Know-How relating to MCI's
production techniques and methods, including instructing DSM
Representatives who will be responsible for transmitting this
information to other DSM Representatives;
(iii) train at the M-II Plant the prospective operators of
the Initial Plant; provided, however, that MCI need not train any more
than four operators at any one time; and
(iv) assist DSM in commissioning and starting-up the Initial
Plant, including making at least two MCI Representatives available to
DSM at the Initial Plant during this period; provided, however, that
all of MCI's Travel Costs associated with such visits shall be borne
by DSM.
(c) For a period of nine months from the Closing Date, MCI shall
ensure that a qualified individual is available at all times during
reasonable business hours to respond to inquiries from DSM regarding the
transfer of Know-How under paragraph (b), including making any necessary
visits to DSM's facilities, at DSM's cost, at reasonable intervals. All of
MCI's other obligations under paragraph (b) shall terminate 21 days after
the Initial Plant operates continuously for the first time over a five-day
period. Notwithstanding the services to be provided by MCI's
Representatives under paragraph (b), DSM shall have ultimate control over
and responsibility for all design and engineering decisions concerning the
Initial Plant and its process equipment, and concerning all respects of
operating and maintaining such plant.
Section 7.2 Transfer of Unpatented Improvements. If either party
possesses any information that comprises some or all of an Improvement not
possessed by the other party, the party possessing such information shall
deliver promptly to the other party all such information that has been set
forth in writing, and shall consult with such other party to determine the
most effective means of furnishing the remainder of such information.
Thereafter, at such times and in such manner as may be mutually agreeable
to the parties, the party possessing such information shall furnish such
remaining information by visiting the other party's Plants, permitting the
other party to visit its Plants, training the other party's
Representatives, or taking any other mutually agreeable steps that provide
for the transfer. Unless the parties otherwise agree in writing, the party
receiving such information shall bear all Travel Costs associated with any
visits by its Representatives to a Plant of the party possessing such
information or any visits by the other party's Representatives to its
Plants, whether for training purposes or otherwise.
<PAGE>
Section 7.3 Access to the Other Party's Plants. (a) Unless otherwise
provided to the contrary in any other Section of this Agreement, whenever
any provision of this Agreement permits the Representatives of one party to
visit a Plant of the other party for any reason, the specific Plant to be
visited, the number of visiting Representatives and the length of their
visit shall be mutually agreed upon between the parties in view of the
available personnel of both parties, the reasonable needs and requirements
of the visiting Representatives, and the available facilities and
production schedule of the owner of the Plant to be visited. Unless
otherwise provided to the contrary in any other Section of this Agreement
or unless the parties otherwise agree in writing, all expenses of all such
visiting Representatives, including but not limited to their wages,
benefits and Travel Costs, shall be the sole obligation of the party
employing the visiting Representatives.
(b) Any Representatives of DSM or MCI visiting a Plant of the
other party under any Section of this Agreement shall be required to
conform to the rules generally applied by the owner of the Plant to its
personnel and visitors; provided that the party employing such
Representatives shall at all times remain responsible for the acts of its
Representatives during any such visit.
Section 7.4 Other Technical Assistance. If prior to the tenth
anniversary of the Closing Date either party requests technical assistance
services regarding the MCI Technology, or its implementation or use, that
are not contemplated by the terms of this Agreement, the other party shall
engage in good faith discussions with the requesting party to determine if
it can provide such services on mutually agreeable terms and conditions.
ARTICLE 8 - SECRECY AND CONFIDENTIALITY
Section 8.1 Confidential Information. (a) In connection with
performing its obligations under this Agreement, each party will disclose
to the other certain oral and written Confidential Information that is non-
public and proprietary in nature. Each party hereby agrees that all
Confidential Information received by it from the other party shall be used
solely for the purposes authorized hereunder and shall be kept by the
receiving party in the strictest secrecy and confidence. Except as
permitted by Section 8.2, neither party shall disclose any Confidential
Information to any Person.
(b) For purposes of this Agreement, "Confidential Information"
means all information delivered, disclosed or otherwise made available by
either party to the other party that directly or indirectly relates to the
delivering party or its business, operations, technologies, know-how,
manufacturing processes, process specifications, equipment, assets,
liabilities, financial condition, results of operations or prospects;
provided, however, that the term Confidential Information shall not include
any information that the receiving party can prove (i) at the time of
disclosure or thereafter is generally available to the public other than as
a result of disclosure by the receiving party or its Representatives in
violation of this Agreement or (ii) was available to the receiving party on
a non-confidential basis from an independent source, provided that such
source was not, to the best of the receiving party's knowledge after due
inquiry, bound by a confidentiality agreement with the other party or its
Representatives (it being understood that the receiving party's due inquiry
need not consist of any investigation other than confirming orally or in
writing with the independent source that such source is not bound by a
confidentiality agreement with the other party or its Representatives).
(c) All Preliminary Information and all Due Diligence Minutes
shall be deemed to be Confidential Information of MCI. After the date of
this Agreement, all other information delivered, disclosed or otherwise
made available by one party to the other party shall be presumed not to be
Confidential Information unless (i) with respect to information furnished
in writing or in some other tangible form, such documents or other
materials have affixed to them in a prominent location a legend that
reads: "CONFIDENTIAL INFORMATION OF [INSERT NAME OF DELIVERING PARTY]
UNDER TECHNOLOGY TRANSFER AND TECHNICAL COOPERATION AGREEMENT DATED
FEBRUARY 25, 1997", or any substantially similar legend, or (ii) with
respect to information furnished orally, such information is confirmed
within 30 days by a letter from the party furnishing such information to
the party receiving such information, which letter shall expressly state
that the purpose of the letter is to confirm the oral delivery of
Confidential Information as of a prior date to a specified Representative
or Representatives of the receiving party, and which letter shall be
stamped or otherwise marked with a legend similar to that set forth above.
Each party shall maintain a true and complete list and copy of all
documents, materials or letters furnished and received by it under this
Section, and shall, upon the reasonable request of the other party, afford
the other party with access to its list and copies.
<PAGE>
Section 8.2 Permitted Recipients. (a) Confidential Information may
be disclosed by the receiving party only to (i) those of its
Representatives who need to know such information to discharge their
duties, (ii) those third-party vendors, consultants or subcontractors
retained in connection with constructing, operating or maintaining any
Plants who need to know such information to discharge their duties,
provided that such Person has agreed to maintain the secrecy of such
information pursuant to a confidentiality agreement not less restrictive
than the terms of this Article 8, (iii) any Affiliates of the receiving
party to whom Confidential Information is transferred pursuant to a
transaction of the type described in Section 14.3(b)(ii) or (iii), (iv) any
Person who proposes to engage in a transaction of the type described in
Section 14.3(b)(i) or (iv), provided that such Person has agreed to
maintain the secrecy of such information pursuant to a confidentiality
agreement not less restrictive than the terms of this Article 8, and
(v) any other Person that the disclosing party specifically designates in
writing (collectively, "Permitted Recipients").
(b) Any party that discloses Confidential Information to a
Permitted Recipient shall inform the Permitted Recipient of the secret and
confidential nature of the Confidential Information and shall advise such
Permitted Recipient to maintain such information in the strictest secrecy
and confidence (in addition to taking any other steps required by this
Agreement). The disclosing party further agrees to take all additional
reasonable precautions necessary to prevent the disclosure of the
Confidential Information by its Permitted Recipients to any third party,
and agrees to be responsible for any breach of this Agreement (or any
similar agreements entered into under paragraph (a)) by its Permitted
Recipients.
<APGE>
Section 8.3 Prior Notice. In the event that any party or its
Representatives become required by law or compelled by legal process to
disclose any Confidential Information furnished by the other party, such
party shall provide the other party with prompt prior written notice of
such requirement so that such other party may seek a protective order (or
other appropriate remedy) or, in its discretion, waive compliance with this
Agreement.
Section 8.4 Control Procedures. Each party agrees to establish and
maintain control procedures sufficient to assure that the Confidential
Information furnished by the other party is maintained, used and disclosed
only as authorized hereunder.
ARTICLE 9 - INFRINGEMENT ACTIONS BY THIRD PARTIES
Section 9.1 Infringement Actions by Third Parties involving the MCI
Technology. Each party shall promptly notify the other of any infringement
or potential infringement of the MCI Technology or Improvements that comes
to its attention. Upon delivery of any such notice, the parties shall
confer promptly with respect to the initiation and prosecution of
litigation against the alleged infringer or infringers. If the parties so
agree in writing, DSM shall commence and prosecute such suit with the
advice and assistance of MCI, and the parties shall share the expenses of
such suit and any judgments, damages, or other recovery which may result
therefrom in the proportions that they see fit. If no such agreement can
be reached following good faith discussions or if MCI shall elect not to
participate in such litigation, DSM shall be entitled to commence and
prosecute such suit at its own expense and shall retain all judgments,
damages, or other recovery. If DSM shall elect not to exercise such rights
or shall fail to commence any such suit within three months of written
request from MCI made after the initial conference provided for above, MCI
may commence and prosecute such suit at its own expense and shall retain
all judgments, damages, or other recovery. In the event either party
unilaterally prosecutes any such suit in accordance with this Section, (i)
the other party may, at its discretion and at its cost, participate (but
not control) in the prosecution of such suit and (ii) the other party
shall, upon the prosecuting party's written request, cooperate in the
prosecution of such suit to the extent reasonably requested by the
prosecuting party (including being joined as a party if required by law);
provided, however that such other party shall not be required to incur any
out-of-pocket expenses in excess of US $10,000 unless indemnified therefor
by the prosecuting party.
Section 9.2 Infringement Actions by Third Parties involving DSM's
Technology. MCI shall promptly notify DSM of any infringement or potential
infringement of the technology licensed to MCI under Section 3.3 that comes
to MCI's attention. DSM shall be free to respond to any such infringement
or potential infringement solely in the manner that it sees fit, and shall
be entitled to retain all judgments, damages or other recovery which may
result from any suits that it elects to pursue in connection therewith.
<PAGE>
ARTICLE 10 - REPRESENTATIONS AND WARRANTIES;
LIMITATION OF LIABILITIES; INDEMNIFICATION
Section 10.1 Representations and Warranties. (a) Subject to the
qualifications and limitations set forth in Section 10.2 and except as set
forth on Schedule 10.1 attached hereto, MCI represents and warrants to DSM
that:
(i) MCI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, United
States of America, and has the full right, power and authority to
enter into this Agreement and to perform all of its obligations
hereunder;
(ii) This Agreement has been duly authorized and approved by
all necessary corporate action of MCI and has been duly executed and
delivered by MCI;
(iii) Neither the execution and delivery of this Agreement
nor the performance of the transactions herein contemplated will
materially conflict with or result in a material breach of any of the
terms or provisions of, constitute a default under, or invalidate or
give any other party any rights of cancellation or termination of,
(A) the certificate of incorporation or bylaws of MCI, (B) any note,
indenture, mortgage, license agreement or other material written
agreement or instrument to which MCI is a party or by which it is
bound, or (C) any material law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality
or court having jurisdiction over MCI or any of its assets;
(iv) MCI owns the Application Patents and Process Patents,
free and clear of any title encumbrance;
(v) MCI has the right to use and assign the Know-How, free
and clear of any title encumbrance;
(vi) The Process Patents and the Application Patents
constitute all of the process and application patents and patent
applications pertaining to MCI's high pressure and high temperature
noncatalytic melamine process and production technology, or pertaining
to applications of melamine produced by such process and production
technology;
(vii) Since the issuance of the Process Patents, there have
been no claims or actions brought against MCI alleging that the
Process Patents are invalid or that the MCI Technology infringes the
rights of others; no such claims or actions are pending; and to the
best of MCI's knowledge there is no known basis for any such claim or
action;
<PAGE>
(viii) After careful study and investigation by MCI and its
patent counsel, to the best of MCI's knowledge and belief none of the
MCI Technology, if and when used by DSM in accordance with this
Agreement, will infringe any one or more patents which may issue from
the patent applications referred to in Exhibit G hereto or from patent
applications with the same disclosure or a disclosure not materially
different and entitled to a date not earlier than [*];
(ix) to the best of MCI's knowledge, no Person is infringing
the Application Patents or Process Patents, or is otherwise using any
of the MCI Technology without MCI's consent;
(x) Prior to the date hereof, MCI has not granted to any
Person any license or any other right to use the MCI Technology, or
any option to acquire any such license or rights; and
(xi) all of the Preliminary Information was true and correct
on the date furnished, and all of the information to be reflected in
the Due Diligence Minutes (or, if applicable, MCI's written statements
of objection incorporated therein) will be true and correct on the
date furnished.
(b) DSM represents and warrants to MCI that:
(i) DSM is a company with limited liability organized under
the laws of The Netherlands, and has the full right, power and
authority to enter into this Agreement and to perform all of its
obligations hereunder;
(ii) This Agreement has been duly authorized and approved by
all necessary corporate action of DSM and its Affiliates and has been
duly executed and delivered by DSM;
(iii) Neither the execution and delivery of this Agreement
nor the performance of the transactions herein contemplated will
materially conflict with or result in a material breach of any of the
terms or provisions of, constitute a default under, or invalidate or
give any other party any rights of cancellation or termination of,
(A) the organizational documents of DSM, (B) any note, indenture,
mortgage, license agreement or other material written agreement or
instrument to which DSM or any of its Affiliates is a party or by
which DSM or any of its Affiliates is bound, or (C) any material law,
order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court having jurisdiction over DSM or
any of its Affiliates or any of their assets;
(iv) DSM owns all patents relating to its melamine reactor
technology and has the right to use and license all of its unpatented
melamine reactor technology, and, to the best of its knowledge, owns
all other patents or has the right to use and license all other know-
how or technology that may be licensed to MCI under Section 3.3, in
all cases free and clear of any title encumbrance; and
____________________
* Omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
<PAGE>
(v) To the best of DSM's knowledge, no Person is infringing
any of the patents that may be licensed under Section 3.3 or otherwise
using any of the know-how or other technology that may be licensed to
MCI thereunder without DSM's consent.
Section 10.2 Limitation of Liabilities. (a) DSM acknowledges that
prior to entering into this Agreement it has received and reviewed the
Preliminary Information and that it will be provided the further
opportunity to review the MCI Technology during the Due Diligence Period,
and that its decision to enter into this Agreement and consummate the
Closing Date Transactions is and will be based upon its independent
evaluation of the MCI Technology. Subject solely to Article 10, DSM hereby
waives all rights to make any claims against MCI or its Affiliates, or any
of their respective Representatives, agents, successors or assigns,
regarding the sufficiency, scope, adequacy or value of the MCI Technology,
including without limitation any claim to recover all or part of cash
payments previously paid under Section 4.2 or under the Promissory Notes.
(b) Except as otherwise specifically provided in Section 10.1,
MCI expressly disclaims all representations, warranties and guarantees,
whether express or implied, regarding the MCI Technology or the technical
advisory services to be performed by MCI hereunder, including without
limitation those relating to (i) the adequacy or fitness for any particular
purpose of the MCI Technology, the Application Patents or the technical
advisory services to be performed by MCI hereunder, (ii) the ability of
DSM's Plants to produce melamine, (iii) the production capacity of DSM's
Plants, (iv) the quality or merchantability of the melamine to be produced
at DSM's Plants, (v) the utility or profitability of DSM's Plants, or
(vi) compliance of the operations and emissions of DSM's Plants with
applicable laws.
(c) Except as otherwise specifically provided in Section 10.1,
DSM expressly disclaims all representations, warranties and guarantees,
whether express or implied, regarding the technology to be licensed under
Section 3.3 or the technical advisory services to be performed by DSM
hereunder, including without limitation those relating to (i) the adequacy
or fitness for any particular purpose of the technology licensed under
Section 3.3 or the technical advisory services to be performed by DSM
hereunder, (ii) the ability of the M-I Plant to produce melamine in amounts
equal to or greater than the amount produced on the date hereof, (iii)
maintaining or increasing the production capacity of the M-I Plant, (iv)
maintaining or increasing the quality or merchantability of the melamine
produced at the M-I Plant, (v) maintaining or increasing the utility or
profitability of the M-I Plant, (vi) maintaining or enhancing compliance of
the operations and emissions of the M-I Plant with applicable law or (vii)
achieving any other objectives that may be identified by the parties in
connection with DSM's Study under Article 3.
Section 10.3 Indemnification. (a) Subject to the limitations of
paragraph (c) below:
(i) MCI shall defend, indemnify and hold harmless DSM and
its Affiliates, and their respective Representatives, agents,
successors and assigns (each a "DSM indemnitee" and collectively the
"DSM indemnitees"), and shall reimburse the DSM indemnitees for, from
and against each and every claim, loss, liability, judgment, cost and
<PAGE>
expense (including interest, penalties and reasonable attorneys' fees)
(collectively, "Losses") imposed on or incurred by the DSM
indemnitees, directly or indirectly, relating to, resulting from or
arising out of (A) a material breach by MCI of the representations and
warranties made by it under this Article 10, unless the DSM indemnitee
was aware of such breach prior to the Closing Date, (B) a material
breach by MCI of any covenant, agreement or other obligation of MCI
under this Agreement, (C) any proceedings that are threatened or
brought by any Person against any DSM indemnitees in connection with
any deaths, bodily injuries, property damages, or related liabilities
suffered or allegedly suffered by such Person arising out of the
construction, operation or maintenance of any of MCI's Plants, the
sale or use of any melamine produced at any of MCI's Plants, or the
sale or use of any end-products manufactured from any such melamine,
or (D) any proceedings that are threatened or brought by any Person
against any DSM indemnitees for infringement or alleged infringement
of any patents, know-how or other proprietary rights of such other
Person arising out of DSM's ownership or use of the MCI Technology;
and
(ii) DSM shall defend, indemnify and hold harmless MCI and
its Affiliates, and their respective Representatives, agents,
successors and assigns (each an "MCI indemnitee" and collectively the
"MCI indemnitees"), and shall reimburse the MCI indemnitees for, from
and against all Losses imposed on or incurred by the MCI indemnitees,
directly or indirectly, relating to, resulting from or arising out of
(A) a material breach by DSM of the representations and warranties
made by it under this Article 10, unless the MCI indemnitee was aware
of such breach prior to the Closing Date, (B) a material breach by DSM
of any covenant, agreement or other obligation of DSM under this
Agreement, (C) any proceedings that are threatened or brought by any
Person against any MCI indemnitees in connection with any deaths,
bodily injuries, property damages, or related liabilities suffered or
allegedly suffered by such Person arising out of the construction,
operation or maintenance of any of DSM's Plants, the sale or use of
any melamine produced at any of DSM's Plants, or the sale or use of
any end-products manufactured from any such melamine, or (D) any
proceedings that are threatened or brought by any Person against any
MCI indemnitees for infringement or alleged infringement of any
patents, know-how or other proprietary rights of such other Person
arising out of MCI's use of the technology licensed to MCI under
Section 3.3.
(b) Any indemnitee seeking indemnification hereunder shall
furnish written notice to the indemnifying party of any matter with respect
to which the indemnitee seeks to be indemnified hereunder (an "indemnity
claim"). If the indemnity claim arises from the claim or demand of a third
party, the indemnifying party shall have the right to assume its defense,
including the hiring of counsel and the payment of all associated fees and
expenses. The indemnitee shall have the right to employ separate counsel
with respect to such claim, and to participate in (but not control) the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnitee; provided, however, that if both the indemnitee
and the indemnifying party are named as parties, such parties shall confer
promptly with respect to the defense thereof, and, in the absence of an
agreement to the contrary, each party shall employ separate counsel in the
<PAGE>
defense thereof and the indemnifying party shall bear the full cost and
expense of the indemnitee's separate counsel. The indemnifying party shall
not, without the indemnitee's prior consent, settle or compromise any claim
or consent to the entry of any judgment with respect to any claim.
(c) Notwithstanding anything to the contrary herein:
(i) Neither party shall have any liability under subsection
(i)(A) or (ii)(A) of Section 10.3(a) unless written notice of an
indemnity claim shall have been given prior to the earlier of January
1, 2002 or 18 months after the date upon which the Initial Plant
produces its first 1000 tons of melamine following implementation of
the start-up procedures set forth in the construction agreement under
which such plant is built.
(ii) Neither party shall have any liability under subsection
(i)(B) or (ii)(B) or Section 10.3(a) unless written notice of an
indemnity claim shall have been given prior to the earlier of (A) the
first anniversary of the date upon which the indemnitee becomes aware
of the indemnifying party's breach or (B) the expiration date of the
applicable statute of limitations with respect to such claim; and
neither party shall have any liability under subsections (i)(C) or
(D), or (ii)(C) or (D), unless written notice of an indemnity claim
shall have been given within 180 days of the date on which the
proceedings giving rise to such indemnity claim are initiated or are
threatened in writing.
(iii) Neither party shall be liable under subsection (i)(C)
or (ii)(C) of Section 10.3(a) for Losses that it can establish are
directly attributable to negligent acts or omissions of any
Representatives of the other party that occurred while such
Representatives were on its premises, in which event the party
employing such Representative shall indemnify the other party on the
terms and conditions of this Section for those Losses shown to be
directly attributable to such negligent acts or omissions.
(iv) Notwithstanding anything herein to the contrary,
neither party shall be obligated under subsection (i)(D) or (ii)(D) to
make indemnification payments in excess of US $12.5 million.
(v) Subject to the limitations specified in paragraphs (iv)
and (vii) of this Section 10.3(c), neither party shall be obligated
under this Agreement to make indemnification payments that in the
aggregate exceed US $25 million.
(vi) Neither party shall have any liability under this
Agreement unless and until the aggregate amount of all Losses of the
other party exceeds US $100,000, in which event the indemnifying party
shall be liable only for Losses in excess of such amount.
(vii) Under no circumstances shall any indemnifying party be
liable under this Agreement for any loss of anticipated profits or
other special, incidental or consequential damages that in the
aggregate exceed US $12.5 million.
<PAGE>
ARTICLE 11 - DUE DILIGENCE PERIOD
Section 11.1 Due Diligence. (a) DSM acknowledges that the Preliminary
Information attached as Exhibit D constitutes all of the documents relating
to the MCI Technology that MCI furnished to DSM prior to the date hereof.
For a period commencing on the date hereof and ending at the close of
business on the 20th following business day (the "Due Diligence Period"),
MCI shall afford to DSM complete access to the M-II Plant, its production
records, and its employees to the extent necessary for DSM to verify the
accuracy of the Preliminary Information. DSM may at its cost send up to
six DSM Representatives to MCI's offices to conduct its review, provided
that no more than four DSM Representatives shall be provided access to the
M-II Plant at any specific time. MCI shall use its commercially reasonable
best efforts to operate the M-II Plant in the ordinary course of business
during the Due Diligence Period. DSM shall conduct such examination in
such manner as not to interfere unreasonably with the operation of the M-II
Plant or the conduct of MCI's business. MCI reserves the right to
accompany each DSM employee during his or her inspection of the M-II Plant
and to limit the scope of his or her inquiries to those matters necessary
in order for DSM to verify the accuracy of the Preliminary Information.
(b) At such intervals during the Due Diligence Period that DSM
sees fit, DSM's Representatives shall be permitted to prepare written
minutes (the "Due Diligence Minutes") that record any findings that such
Representatives deem to be relevant. MCI shall be permitted to review
drafts of all such minutes, and, after any mutually acceptable revisions
have been made, definitive copies of the minutes shall be executed and
delivered by Martin F. Lapari, on behalf of MCI, and by Ton C.M. van der
Put, on behalf of DSM. If the parties cannot mutually agree to revisions
to any draft minutes, MCI shall be free to incorporate into the minutes a
written statement that summarizes its objections to all or a portion of the
minutes, and MCI's rationales therefor, and definitive copies of the
minutes incorporating such written statement shall be executed and
delivered by the parties indicated above.
Section 11.2 Termination Procedures. In the event that DSM shall
conclude in good faith at any time during the Due Diligence Period that the
Preliminary Information was or may have been materially inaccurate on the
date provided, then DSM shall consult with MCI regarding DSM's conclusions
for a period of up to 15 days after the end of the Due Diligence Period.
If during such 15-day period MCI concedes in writing that the Preliminary
Information was materially inaccurate on the date provided or if at the end
of such 15-day period DSM continues to believe in good faith that the
Preliminary Information was materially inaccurate on the date provided,
then DSM shall be entitled to notify MCI in writing no later than five days
after such 15-day period of its desire to terminate this Agreement. Unless
MCI has conceded such inaccuracy in writing, DSM's notice shall be
accompanied by a comprehensive report that documents the basis of its
findings. Upon receipt of DSM's notice and accompanying report, MCI shall
have five business days to respond in writing. If during such five-
business-day period, MCI fails to challenge DSM's findings or concedes in
writing that the Preliminary Information was materially inaccurate on the
date provided, then DSM shall be permitted to terminate this Agreement by
delivery of a written termination notice. If during such five-business-day
period, MCI furnishes a written response challenging DSM's findings, the
<PAGE>
parties shall promptly enter into good faith discussions to determine if
the findings upon which DSM based its decision to furnish its notice are
fully supported by all information reasonably available to the parties. If
the parties cannot resolve their differences within 30 days, either party
may submit the controversy to arbitration in accordance with Section 14.6;
provided, however, that notwithstanding anything in this Agreement to the
contrary, DSM shall have the burden of proving that the Preliminary
Information was materially inaccurate on the date provided and the sole
remedies that may be awarded by the arbitrators shall be as provided in
Section 11.3.
Section 11.3 Remedies. If in connection with any proceeding initiated
under Section 11.2 the arbitrators find in favor of DSM, DSM shall be
permitted to terminate this Agreement by delivery of a written termination
notice. If the arbitrators find in favor of MCI, the arbitrators shall
schedule a Closing and each party shall attend the Closing and consummate
the Closing Date Transactions.
Section 11.4 Extension of Due Diligence Period. Notwithstanding
anything to the contrary in this Article 11, the Due Diligence Period shall
be extended for such amount of time as may be necessary to compensate for
events of the type described in Section 14.1; provided, however that no
such extension shall exceed 90 days. If any such event prevents DSM for
more than 90 days from completing its review under this Article 11, then
this Agreement will automatically terminate without further action of the
parties unless both parties agree to the contrary in writing or DSM waives
its rights to conduct a review under this Article 11.
ARTICLE 12 - CONDITIONS TO CLOSING
The obligations of each of the parties hereto to consummate the
Closing Date Transactions are subject to the satisfaction (or the waiver by
both parties) of the following conditions at or prior to the Closing:
Section 12.1 Lapse of Due Diligence Period. The Due Diligence Period
shall have lapsed and DSM shall have either (i) failed to initiate the
consultations described in the first sentence of Section 11.2 or (ii)
agreed or been ordered by arbitrators to consummate the Closing Date
Transactions.
Section 12.2 Restraining Action. No action or proceeding shall have
been instituted before a court or other governmental body to restrain or
prohibit any of the transactions contemplated hereunder and no governmental
agency shall have given notice to either party to the effect that (i)
consummation of any such transactions would constitute a violation of law
or (ii) it intends to commence proceedings to restrain consummation of any
such transactions.
Section 12.3 Statutory Requirements and Regulatory Approval. All
statutory requirements under any applicable laws for the valid consummation
of the Closing Date Transactions shall have been fulfilled; all appropriate
orders, consents and approvals from all regulatory agencies and other
governmental authorities whose order, consent or approval is required by
law for the consummation of the Closing Date Transactions shall have been
received; and the terms of all requisite orders, consents and approvals
shall then permit the Closing Date Transactions without imposing any
material conditions with respect thereto.
<PAGE>
ARTICLE 13 - TERMINATION AND AMENDMENT
Section 13.1 Term. (a) Except as otherwise provided in this Article
13 or Section 14.10, each provision of this Agreement shall remain in full
force and effect until June 7, 2015. Upon termination of this Agreement on
such date:
(i) DSM shall continue to own all of the right, title and
interest to the MCI Technology and the Improvements (free of any of
the restrictions set forth in Article 2); provided, however, that MCI
shall retain the right to use the MCI Technology and the Improvements
worldwide, perpetually and royalty-free (free of any of the
restrictions set forth in Article 2 or Section 5.1(a));
(ii) DSM shall continue to have the perpetual and royalty-
free right to use worldwide the Application Patents licensed under
Section 2.1(c);
(iii) MCI shall continue to have the perpetual and royalty-
free right to use the technology of DSM licensed under Section 3.3(a)
at the M-I Plant (or any replacement plant described in Section
3.3(b));
(iv) Any joint venture company organized under Section
2.3(c) and any owner of an Option Plant constructed under Section 2.4
shall, in the absence of a written agreement to the contrary, continue
to have the perpetual and royalty-free right to use all technology
validly used by it under this Agreement immediately prior to the
termination date, subject to any and all conditions and restrictions
on the use of such technology in effect immediately prior to the
termination date;
(v) For a period of five years from termination, neither
party shall, and shall cause its Affiliates and Representatives not
to, disclose to others or assist others in using any Confidential
Information furnished to it by the other party, or otherwise breach
any of the terms set forth in Article 8;
(vi) Sections 10.3, 14.6, 14.7 and 14.8 and this Article 13
shall survive the termination of this Agreement; and
(vii) Unless otherwise provided herein, any termination
shall not prejudice any cause of action or claim by either MCI or DSM
accrued or to accrue on account of any breach or default by the other
party.
<PAGE>
(b) If this Agreement is terminated in accordance with Article
11, this Agreement shall be void and neither party nor its Representatives
shall have any liability to the other party by reason of entering into or
terminating this Agreement; provided, however, that each party shall be
bound by the provisions of Section 13.1(a)(v) for the period therein
indicated.
Section 13.2 Modification. Subject to Section 14.10, this Agreement
shall not be amended or modified at any time except by an instrument in
writing executed by duly authorized representatives of each party.
ARTICLE 14 - MISCELLANEOUS
Section 14.1 Force Majeure. Notwithstanding any other provision of
this Agreement, neither party nor any of its Affiliates shall be
responsible or liable to the other party in any manner for its failure to
perform or its delay in performing hereunder due to contingencies beyond
its reasonable control, including, without limitation, strikes, riots, war,
warlike conditions, hostilities, blockade, revolution, fires, floods, or
other significant accidents or acts of God, provided that upon cessation of
such events such party shall thereupon promptly perform or complete the
performance of its obligations hereunder. Any party affected by any such
contingencies shall give the other party prompt notice of that fact and
shall use its best efforts to avoid or remove the cause of such non-
performance and shall continue the performance of all other obligations
hereunder not affected by such contingency.
Section 14.2 Waiver. The failure by any party to insist upon strict
performance of or to enforce any of its rights hereunder shall not be
deemed to be a waiver of, or estoppel against, assertion of the right to
require such performance, unless such waiver is an express written waiver
that has been duly executed and delivered by the waiving party. Waiver of
any one breach in one case or instance shall not be deemed to constitute or
imply a waiver of any other breach with respect to any other case or
instance, whether of similar nature or otherwise.
Section 14.3 Beneficiaries; Assignment of Rights. (a) This Agreement
shall be binding upon and inure to the benefit of the respective parties
and their respective permitted successors and assigns, but, except as
otherwise provided in paragraph (b), neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assignable by either
party without the prior written consent of the other party.
(b) Notwithstanding anything to the contrary in paragraph (a):
(i) either party may freely assign all of its rights and
obligations under this Agreement in connection with a sale of all or
substantially all of its assets, or pursuant to a merger,
consolidation, business combination or similar transaction, but only
if the transferee, as a condition to such transaction, acknowledges
that it is bound by all of the terms and conditions of this Agreement
by duly executing and delivering an instrument reasonably satisfactory
to the non-transferring party, at which time the transferor shall have
no further liability hereunder (unless otherwise provided in such
assumption instrument or by operation of law).
<PAGE>
(ii) DSM may freely sell, assign or license the MCI
Technology and Improvements to any Affiliate of DSM (but to no other
Person), provided that such Affiliate agrees to be bound by the
restrictions on the use of the MCI Technology and Improvements
specified in Section 2.3, by confidentiality covenants no less
restrictive than those set forth in Article 8, and by covenants
preventing any further transfers of such technology by such Affiliate,
all pursuant to a duly executed and delivered instrument reasonably
satisfactory to MCI;
(iii) MCI may freely sell, assign, license or sublicense the
Technology Rights to any Affiliate of MCI (but to no other Person),
provided that such Affiliate agrees to be bound by the restrictions on
the use of the Technology Rights specified in Section 2.3, by
confidentiality covenants no less restrictive than those set forth in
Article 8, and by covenants preventing any further transfers of such
technology by such Affiliate, all pursuant to a duly executed and
delivered instrument reasonably satisfactory to DSM;
(iv) MCI may freely assign all of its rights to build one or
more Option Plants under Section 2.4 to any Person, provided that such
Person agrees to be bound by the restrictions on the use of the MCI
Technology specified in Section 2.3, by confidentiality covenants no
less restrictive than those set forth in Article 8, and by covenants
obligating such Person to pay to DSM [*] per Option Plant and
preventing such Person from transferring such technology in any
manner, all pursuant to a duly executed and delivered instrument
reasonably satisfactory to DSM; and
(v) DSM may freely sublicense its rights under Section
2.1(c).
Section 14.4 Language. This Agreement may be translated into one or
more languages, but the English version of this Agreement shall be
determinative of, and shall control the meaning and interpretation of, the
terms and conditions of this Agreement.
Section 14.5 Further Assurances. The parties shall use their
commercially reasonable best efforts to take any and all actions and to
execute and deliver any and all documents that may be necessary or
advisable to effectuate the provisions and purposes of this Agreement. All
such documents are to be prepared in the English language unless the laws
of any other country or governmental body require preparation thereof in
another language.
Section 14.6 Arbitration. The parties hereto shall attempt to resolve
any dispute, controversy, difference, or claim arising out of or relating
to this Agreement by negotiation in good faith. If such negotiation fails
to resolve such dispute, controversy, difference or claim within 30 days
after either party delivers to the other a notice of its intent to submit
such matter to arbitration, then either party may, as its sole remedy
hereunder, submit such matter to arbitration before the International
____________________
* Omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
<PAGE>
Chamber of Commerce in a proceeding to be held in London, England. The
arbitration will be conducted by a three-member panel of arbitrators, one
of whom will be selected by MCI, one by DSM and the third by the other two
arbitrators. If the two arbitrators do not agree upon such third arbitrator
within 20 days, then either MCI or DSM may request the International
Chamber of Commerce to appoint the third arbitrator. Once the third
arbitrator has been selected, the arbitration of the dispute shall be
conducted in English in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (the "Rules"). Unless
otherwise provided or limited by the Rules, each of the parties shall be
given a fair opportunity to prepare and present its position with respect
to the dispute, and each party shall be entitled to call witnesses, examine
and cross-examine witnesses that the other party calls to testify,
introduce documents and other materials, and submit written statements of
position and arguments. Unless otherwise agreed by the parties, any cash
payment awarded by the arbitrators shall be in United States dollars. The
arbitrators shall make a final determination, to be provided in writing to
each party, that resolves the dispute and includes an allocation of the
aggregate fees, costs and expenses of the arbitration between the parties
to the dispute (including arbitration and legal fees), such allocation to
be made in the sole discretion of the arbitrators after giving due
consideration to the relative merits of the parties' positions in the
dispute. All results of the arbitration proceeding shall be final,
conclusive and binding on the parties to this Agreement, and shall not be
subject to judicial review. Judgment upon the award rendered by the
arbitrators may be entered in any court having competent jurisdiction.
Section 14.7 Injunctive Remedies. Each party hereby acknowledges that
the other party's remedies under Section 14.6 may be inadequate in the
event that its breaches its covenants set forth in Section 2.3 or 8.1.
Accordingly, in the event of any such breach the non-breaching party shall,
notwithstanding Section 14.6, have the right to seek equitable relief in a
court of competent jurisdiction, including the right to enjoin such breach,
and shall have the right to collect attorneys' fees and costs incurred in
connection with any such action in which it is successful on the merits in
a final and nonappealable judgment.
Section 14.8 CHOICE OF LAW. THE VALIDITY OF THIS AGREEMENT, THE
CONSTRUCTION OF ITS TERMS AND THE DETERMINATION OF THE RIGHTS AND DUTIES OF
THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF LOUISIANA, UNITED STATES OF AMERICA, APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WITHIN SUCH STATE; PROVIDED, HOWEVER,
THAT QUESTIONS AFFECTING THE CONSTRUCTION AND EFFECT OF ANY PATENT SHALL BE
DETERMINED BY THE LAW OF THE COUNTRY IN WHICH THE PATENT HAS BEEN GRANTED,
AND FURTHER PROVIDED THAT THE VALIDITY OF, THE CONSTRUCTION OF, AND THE
DETERMINATION OF THE RIGHTS AND DUTIES OF THE PARTIES UNDER ARTICLE 3 SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE NETHERLANDS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN SUCH COUNTRY.
<PAGE>
Section 14.9 Notices. All notices which may be given under any
provision of this Agreement shall be in writing in English and deemed to
have been duly given when (a) served by facsimile or other written
electronic means of communication, confirmed by registered airmail, or by
certified or registered first class mail, return receipt requested, postage
prepaid and (b) properly addressed to the parties at the addresses
indicated below:
If to MCI:
Melamine Chemicals, Inc.
P. O. Box 748
Donaldsonville, Louisiana 70346
United States of America
Attention: Chairman
Telecopy: (504) 473-0550
If to DSM:
DSM Melamine B.V.
Het Overloon 1, Heerlen
P. O. Box 6500, 6401 JH Heerlen
The Netherlands
Attention: Business Group Director
Telecopy: 31-45-5782808
In the event of a change in the address of either party while this
Agreement is in effect, such party shall promptly notify the other party in
writing, and following receipt of such notice all written notices required
under this Agreement shall be directed to the new address.
Section 14.10 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future
laws of the United States of America, The Netherlands, the European
Community or any other nation, country, sovereign or possession, or by any
court, agency or other governmental authority, such provision shall be
fully severable and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a
part of this Agreement, and the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid, or
unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar in terms to such severed provision as may
be possible, such that the Agreement, with such added provision, will be
legal, valid, and enforceable in such jurisdiction. Notwithstanding
anything in this Section to the contrary, if it is apparent that this
Agreement would have never been entered into by the parties absent the
illegal, invalid, or unenforceable provision, such provision shall not be
severed and the entire Agreement shall be rendered null and void.
<PAGE>
Section 14.11 Entire Agreement. This Agreement (including the exhibits
and schedules attached hereto) constitutes the entire understanding between
the parties with respect to the subject matter hereof and supersedes all
prior agreements, arrangements or understandings relating to the subject
matter hereof.
Section 14.12 Press Releases. Neither party, without the prior written
consent of the other, will issue any press release or other written or oral
statement for general circulation relating to the transactions contemplated
hereby, except as otherwise required by any applicable law.
Section 14.13 Agency. Neither party shall be deemed to be an agent of
the other party as a result of, or in any transaction under or relating to,
this Agreement, and shall not in any way incur or be empowered to incur any
obligation on behalf of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
MELAMINE CHEMICALS, INC.
By: /s/ Fred Huber
------------------------------------
Name: Fred Huber
Title: President and Chief Executive Officer
DSM MELAMINE B.V.
By: /s/ P. Harten
------------------------------------
Name: P. Harten
Title: Business Group Director
<PAGE>
EXHIBIT B
to Technology Transfer and
Technical Cooperation Agreement
APPLICATION PATENTS
1. 2508 George M. Crews et al - Process for Producing Melamine
Formaldehyde Resins Using Impure Melamine
Country Identifying No. Issue or Filing Date Expiration
_______________ ____________________ ____________________ __________
* United States Patent No. 5,120,821 Issued 6/9/92 2/22/2011
2. 2805 George M. Crews et al - Ammeline-Melamine-Formaldehyde Resins
(AMFR) and Method of Preparation
Country Identifying No. Issue or FIling Date Expiration
_______________ ____________________ ____________________ __________
* United States Patent No. 5,254,665 Issued 10/19/93 8/24/2012
* Australia Patent No. 658,805 Issued 8/15/95 8/23/2009
* Canada SN 2,104,615 Filed 8/23/93 Pending
* European SN 93306687.0 Filed 8/24/93 Pending
(Designating 9 Countries: Austria, Belgium, France, Germany,
Great Britain, Holland, Italy, Spain and Sweden)
* Japan SN 231033/5 Filed 8/24/93 Pending
3. 3781 George M. Crews and Ji Shen - The Preparation of Pigmented
Melamine-Formaldehyde Polymer Beads
Country Identifying No. Issue or FIling Date Expiration
_______________ ____________________ ____________________ __________
* United States SN 669,623 Filed 6/24/96 Pending
<PAGE>
EXHIBIT C
to Technology Transfer and
Technical Cooperation Agreement
PATENT ASSIGNMENT
In exchange for the receipt of good and valuable consideration,
Melamine Chemicals, Inc. ("Assignor") hereby assigns to DSM Melamine B.V.
("Assignee") all of the right, title and interest in the patents issued to,
and the patent applications filed by, Assignor that are identified on Annex
I and Annex II attached hereto (the "Patents"), and all of the rights,
powers, privileges and immunities arising or accruing therefrom, free of
any title encumbrances, subject to certain retained rights of Assignor to
use the Patents on terms and conditions separately agreed upon by Assignor
and Assignee.* Assignor shall execute and deliver any such other
assignment instruments as may be necessary under the laws of any
jurisdiction in order to perfect or register the conveyance of title of the
Patents from Assignor to Assignee.
IN WITNESS WHEREOF, Assignor has caused this Patent Assignment to be
duly executed and delivered as of this _____ day of ____________, 1997.
MELAMINE CHEMICALS, INC.
By: ___________________________________
Name:
Title:
________________________
*MCI and DSM agree that any patent assignment instruments filed in
jurisdictions other than the United States of America or Canada will delete
the phrase "subject to certain retained rights of Assignor to use the
Patents on the terms and conditions separately agreed upon by Assignor and
Assignee."
<PAGE>
Annex I
to Patent Assignment
M-II PATENTS
1. 1704 Roger E. Thomas and David E. Best
--------------------------------------
United States - ANHYDROUS HIGH-PRESSURE MELAMINE SYNTHESIS
Serial No. 568,408 filed January 5, 1984, Abandoned; and Continuation
Serial No. 689,921 filed January 9, 1985
Status: U.S. Patent No. 4,565,867 issued January 21, 1986
Term: 20 years from filing/Expires January 5, 2004
Maintenance Fees Due: July 21, 1989/1993/1997
Corresponding Foreign Filings:
Australia Patent No. 568,469
Austria Patent No. 393,124
Brazil Patent No. PI 8500032-9
Canada Patent No. 1,220,476
Egypt Patent No. 16,900
France Patent No. 2,557,876
Germany Patent No. 3,500,188
Germany DIV Patent No. 3,546,893*
Great Britain Patent No. 2,152,505
Holland Pending
Indonesia Patent No. ID 0,000,565
Ireland Patent No. 057,911
Italy Patent No. 1,188,084
Japan Allowed
Japan DIV Pending
Mexico Patent No. 164,901
New Zealand Patent No. 210,678
Norway Patent No. 176,795
Qatar Cautionary Notice [No Patent System]
South Korea Patent No. 52,521
Spain Patent No. 539,126
Taiwan Patent No. 36,197
*Opposition/DSM N.V. 1996
* * * * * * * * * *
<PAGE>
Annex II
to Patent Assignment
M-IV PATENTS
1. 3697 David E. Best and Amit Gupta
---------------------------------
United States - METHOD FOR INCREASING PURITY OF MELAMINE
Serial No. 479,003 filed June 7, 1995
Status: U.S. Patent No. 5,514,797 issued May 7, 1996
Term: 20 years from filing/Expires June 7, 2015
Maintenance Fees Due: November 7, 1999/2003/2007
Corresponding Foreign Filings:
Australia Pending
Brazil Pending
Canada Pending
Egypt Pending
European Pending
(European elected countries: Austria, France, Germany,
Great Britain, Ireland, Italy, Netherlands and Spain)
India Pending
Indonesia Pending
Japan Pending
Mexico Pending
New Zealand Pending
Norway Pending
Poland Pending
Qatar Cautionary Notice [No Patent System]
Romania Pending
Russia Pending
South Africa Pending
Saudi Arabia Pending
South Korea Pending
Taiwan Pending
Ukraine Pending
Venezuela Pending
United Arab Emirates Pending
2. 3698 David E. Best and Amit Gupta
---------------------------------
United States - MELAMINE OF IMPROVED PURITY PRODUCED BY HIGH-
PRESSURE, NON-CATALYTIC PROCESS
Serial No. 478,088 filed June 7, 1995
Status: U.S. Patent No. 5,514,796 issued May 7, 1996
Term: 20 years from filing/Expires June 7, 2015
Maintenance Fees Due: November 7, 1999/2003/2007
<PAGE>
Corresponding Foreign Filings:
Australia Pending
Brazil Pending
Canada Pending
Egypt Pending
European Pending
(European elected countries: Austria, France, Germany,
Great Britain, Ireland, Italy, Netherlands and Spain)
India Pending
Indonesia Pending
Japan Pending
Mexico Pending
New Zealand Pending
Norway Pending
Poland Pending
Qatar Cautionary Notice [No Patent System]
Romania Pending
Russia Pending
South Africa Pending
Saudi Arabia Pending
South Korea Pending
Taiwan Pending
Ukraine Pending
Venezuela Pending
United Arab Emirates Pending
* * * * * * * * * *
<PAGE>
EXHIBIT E-1
to Technology Transfer and
Technical Cooperation Agreement
FORM OF PROMISSORY NOTE DUE 2000
US $5,000,000.00 Donaldsonville, Louisiana
March ___, 1997
The undersigned unconditionally promises to pay to the order of
Melamine Chemicals, Inc., at its offices at 39046 Highway 18 West,
Donaldsonville, Louisiana 70346, or at such other location as is designated
by the holder hereof, in lawful money of the United States of America, the
principal amount of FIVE MILLION AND NO/100 DOLLARS (US $5,000,000.00), all
of which shall be payable in full on January 1, 2000 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the
rate of FIVE AND NINETY-FOUR ONE-HUNDREDTHS PERCENT (5.94%) per annum.
Interest shall be calculated on a 365 day per year basis and shall be
payable annually in arrears on January 1 of each year, with the first such
interest payment being due on January 1, 1998 and with a final interest
payment in the amount of all outstanding interest then unpaid being due on
the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday,
or any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next
business day.
If, on any date on which an installment of principal or interest is
due under this Note, the undersigned is owed money by Melamine Chemicals,
Inc. under the terms of a final award rendered by arbitrators in accordance
with Section 14.6 of that certain Technology Transfer and Technical
Cooperation Agreement (the "Technology Transfer Agreement") dated as of
February 25, 1997, between Melamine Chemicals, Inc. and the undersigned,
the undersigned may offset the amount of such unpaid award against the
installment of principal or interest then due under this Note. If the
amount of such installment of principal or interest is insufficient to
satisfy the unpaid award in full, the remaining unpaid amount of the award
may be used to offset subsequent installments of principal or interest
under this Note until the award is satisfied in its entirety. If the
amount of such installment of principal or interest is greater than the
amount of the unpaid award, the undersigned shall pay the remainder of such
installment of principal or interest to the holder of this Note on the date
due. Except as expressly set forth in this paragraph, this Note is not
subject to any other right of offset or compensation in favor of the
undersigned. Neither the enforcement nor the collection of this Note is
subject to arbitration under the Technology Transfer Agreement.
Any amounts payable pursuant to this Note, whether principal or
interest, which are not paid on the date due shall bear interest ("Default
Interest") at a rate equal to twelve percent (12%) per annum from such due
date until paid in full.
<PAGE>
All payments on this Note shall be applied first to attorneys' fees
and other costs then accrued, if any; second, to the Default Interest then
accrued, if any; third, to Ordinary Interest then accrued, if any; and,
finally, to the principal installments in the inverse order of maturity.
The undersigned shall have the right and privilege of prepaying all or any
part of this Note at any time without notice or penalty.
This Note shall become immediately due and payable at the option of
the holder hereof, without presentment or demand or any notice to the
undersigned or any other person obligated hereon, upon (a) the
undersigned's failure to pay any installment of principal or interest under
this Note on or before the due date thereof, (b) the undersigned becoming
subject to bankruptcy, receivership, liquidation, or other insolvency
proceedings, whether voluntarily or involuntarily, whether under federal,
state or foreign law or (c) the undersigned making a general assignment for
the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or
any judicial proceedings, or if this Note is not paid at maturity, however
such maturity may be brought about, and it is placed in the hands of an
attorney for collection, then the undersigned unconditionally promises to
pay all reasonable attorneys' fees and court costs associated with the
enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this
Note waive demand, presentment for payment, notice of non-payment, protest,
notice of protest, all pleas of division and discussion and all other
notice, filing of suit and diligence in collecting this Note or enforcing
any security herefor, and agree to any substitution, exchange or release of
any of such security or the release of any party primarily or secondarily
liable hereon and further agree that it will not be necessary for any
holder hereof, in order to enforce payment of this Note, to first institute
suit or exhaust its remedies against any maker or others liable herefor, or
to enforce its rights against any security herefor, and consent to any
extensions or postponements of the time of payment of this Note or any
other indulgences with respect hereto, without notice thereof to any of
them and hereby bind themselves in solido for the payment hereof in
principal, interest, costs and attorneys' fees; provided, however, that
nothing in the foregoing paragraph shall operate as a waiver of the rights
of the undersigned against MCI or its successors under the fourth paragraph
of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of Louisiana, United States of America.
DSM MELAMINE B.V.
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT E-2
to Technology Transfer and
Technical Cooperation Agreement
FORM OF PROMISSORY NOTE DUE 2005
US $5,000,000.00 Donaldsonville, Louisiana
March ___, 1997
The undersigned unconditionally promises to pay to the order of
Melamine Chemicals, Inc., at its offices at 39046 Highway 18 West,
Donaldsonville, Louisiana 70346, or at such other location as is designated
by the holder hereof, in lawful money of the United States of America, the
principal amount of FIVE MILLION AND NO/100 DOLLARS (US $5,000,000.00), all
of which shall be payable in full on January 1, 2005 (the "Maturity Date").
The outstanding principal amount of this Note shall bear interest
("Ordinary Interest") from and including the date hereof until paid at the
rate of SIX AND THIRTY-TWO ONE-HUNDREDTHS PERCENT (6.32%) per annum.
Interest shall be calculated on a 365 day per year basis and shall be
payable annually in arrears on January 1 of each year, with the first such
interest payment being due on January 1, 1998 and with a final interest
payment in the amount of all outstanding interest then unpaid being due on
the Maturity Date.
If a payment of principal or interest falls due on a Saturday, Sunday,
or any other day on which financial institutions are generally not open for
business in New Orleans, Louisiana, payment shall be made on the next
business day.
If, on any date on which an installment of principal or interest is
due under this Note, the undersigned is owed money by Melamine Chemicals,
Inc. under the terms of a final award rendered by arbitrators in accordance
with Section 14.6 of that certain Technology Transfer and Technical
Cooperation Agreement (the "Technology Transfer Agreement") dated as of
February 25, 1997, between Melamine Chemicals, Inc. and the undersigned,
the undersigned may offset the amount of such unpaid award against the
installment of principal or interest then due under this Note. If the
amount of such installment of principal or interest is insufficient to
satisfy the unpaid award in full, the remaining unpaid amount of the award
may be used to offset subsequent installments of principal or interest
under this Note until the award is satisfied in its entirety. If the
amount of such installment of principal or interest is greater than the
amount of the unpaid award, the undersigned shall pay the remainder of such
installment of principal or interest to the holder of this Note on the date
due. Except as expressly set forth in this paragraph, this Note is not
subject to any other right of offset or compensation in favor of the
undersigned. Neither the enforcement nor the collection of this Note is
subject to arbitration under the Technology Transfer Agreement.
Any amounts payable pursuant to this Note, whether principal or
interest, which are not paid on the date due shall bear interest ("Default
Interest") at a rate equal to twelve percent (12%) per annum from such due
date until paid in full.
<PAGE>
All payments on this Note shall be applied first to attorneys' fees
and other costs then accrued, if any; second, to the Default Interest then
accrued, if any; third, to Ordinary Interest then accrued, if any; and,
finally, to the principal installments in the inverse order of maturity.
The undersigned shall have the right and privilege of prepaying all or any
part of this Note at any time without notice or penalty.
This Note shall become immediately due and payable at the option of
the holder hereof, without presentment or demand or any notice to the
undersigned or any other person obligated hereon, upon (a) the
undersigned's failure to pay any installment of principal or interest under
this Note on or before the due date thereof, (b) the undersigned becoming
subject to bankruptcy, receivership, liquidation, or other insolvency
proceedings, whether voluntarily or involuntarily, whether under federal,
state or foreign law or (c) the undersigned making a general assignment for
the benefit of its creditors or becoming unable to pay its bills as they
become due in the regular course of its business.
If this Note is collected by suit or through any bankruptcy court, or
any judicial proceedings, or if this Note is not paid at maturity, however
such maturity may be brought about, and it is placed in the hands of an
attorney for collection, then the undersigned unconditionally promises to
pay all reasonable attorneys' fees and court costs associated with the
enforcement of this Note.
The undersigned and all sureties, endorsers and guarantors of this
Note waive demand, presentment for payment, notice of non-payment, protest,
notice of protest, all pleas of division and discussion and all other
notice, filing of suit and diligence in collecting this Note or enforcing
any security herefor, and agree to any substitution, exchange or release of
any of such security or the release of any party primarily or secondarily
liable hereon and further agree that it will not be necessary for any
holder hereof, in order to enforce payment of this Note, to first institute
suit or exhaust its remedies against any maker or others liable herefor, or
to enforce its rights against any security herefor, and consent to any
extensions or postponements of the time of payment of this Note or any
other indulgences with respect hereto, without notice thereof to any of
them and hereby bind themselves in solido for the payment hereof in
principal, interest, costs and attorneys' fees; provided, however, that
nothing in the foregoing paragraph shall operate as a waiver of the rights
of the undersigned against MCI or its successors under the fourth paragraph
of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of Louisiana, United States of America.
DSM MELAMINE B.V.
By: ___________________________________
Name:
Title:
